NRC Group ASA

Welcome to this presentation for the fourth quarter and the year of operation 2024. Usually, there is a possibility to ask questions after this presentation. 2024 has been my first year of operation and it is no wonder that it has been a tough and challenging year for NRC Group. We have been forced to handle several challenges that are a few years behind in time. A big impact on the negative results was the goodwill. It has been a tough year. I would like to emphasize that we are within the range that we communicated in the second quarter. I would also like to emphasize that the conclusion of the fourth quarter shows that we are on the right track. We see a margin of 3% in Swedish operations and a margin of .7% in Finnish operations. The company is on the right track after a tough year. I have tried my best to get the right leadership in the company. If I start to get a management position, we have strengthened the management position with three new members during the year. The one you will meet here today is our CEO Oskar. We have a new head of Norrjö, Ingvild Storås, and a new head of Sweden, Thomas Johansson. All with long experience in the industry. We have also strengthened our country's leadership. The biggest change you see here in Norrjö with a new group of leaders. We have also strengthened the Swedish leadership group. I will tell you more about the restructuring process that has been in Finland with a new division aimed at energy and electrification. So that we can meet the market at a more cost-effective and competitive pace. We launched our new strategy during the year on a market day in May. We have implemented it at the level of the board of directors, at the level of the country and we are at the level of the division. So that everyone in the company, especially everyone who leads the company, should be familiar with our strategy and how our value chain works. We carried out an emission in the third quarter of 250 million. We have a strong financial platform to handle our new strategy and also handle our ETM project all the way to the waiting process. I think we have a strong financial position in the company. What is happening on the Trøndemeeråkerbanan, in short, ETM? The big drive here is that the project has doubled in size from how it was thought in 2021. We have a project now that is about 1.6 billion with an extension of almost two years. So of course the project did not become as it was intended, neither for us nor for our customers. The big drives that we think are well documented, that we want to test, are the ground conditions, tunnel conditions, signal work and track access. A lot happens when a project is more than doubled and is as big as it is. And we think we are well documented and we are going to take care of our and the interests of the shareholders. I think the market still looks strong. I do not see any change from what I communicated here in the end and during the year. We have a strong market and I think the position for the company is good. We are dealing with sustainable track-related infrastructure and the market is strong for that part. We also see a good driving trend in our three new segments that have water, energy and defense sectors. Is there anything that stands out despite the fact that it has been a tough year? We have an order entry that is strong with over one billion compared to previous years. I think we have an order at a strong, balanced level. We continue to guide for more than 7 billion in turnover and more than 2% in EBIT marginals for the current year 2025. And given everything that has happened in the company, the positive things that have happened during the year and the conclusion of the fourth quarter, I strongly feel that we will reach that guideline. Back to the market, we see that it is at a strong high level in all three countries, Norway, Sweden and Finland. We see a little timing effect, maybe aimed at the Norwegian market. The Norwegian project may come in the later part of 2025 or possibly in the late 2026, but no change, rather the opposite, all three national transport plans in Norway and Finland. We see a high activity in the energy, defense and water sectors. I would also like to emphasize that our Tender pipeline is now more selective. We are counting on identifying the projects that fit our value chain in the new strategy we have. I would like to emphasize that in a tough year we have the upper hand, a booktobil at 1.0 and the order entry is on the right track with an increase of 1 billion compared to the previous year, which makes me think that our order backlog is at a balanced level. I see that the order that will be executed in 2025 is somewhat declining compared to the previous year. I would like to emphasize that we have had a good start in the first quarter, where we have three projects in the Swedish industry, around 350 million who are not part of the statistics for the year. Which is at an equal level. But we have a strong new level for our order backlog, which is aimed at processing from 2026 onwards. So it is better. But it is always important to secure the right projects that will drive profitable growth in the company. Looking at our health and safety work, I am glad that we see that we are on the right track if we look at the working damage frequency. The working damage frequency is measured from one sick person per day, on one million working hours, and there we measure 4.7 on 5.6. It is never good to have damage in the company when I am glad that we are on the right track, because we focus and have a safety focus in the company and it is always highest up on the agenda. I can also note that our sick person is on the right track, but we are lucky to measure 3.7 against 3.8, but in the right direction. What sticks out that is not good and must always be taken seriously is that we have had two serious accidents during the year. One is an electric shock in a hand. Our person is happily back in work and the other person has a shoulder injury. Both are aimed at the Finnish company. The person in question is waiting for the operation right now and I hope that the person will be back in... ...in... ...in... ...in...replaced. Replaced, of course, I would say. But again, serious accidents, sick people, and insurance companies are highly prioritized in the company and always highest up on the agenda. With that said, I would like to hand over to you, Oscar, to go a little deeper into the numbers.

Thank you, Anders. Good afternoon, everyone. We have now placed a Q4 behind us. Q4 was a quarter that was better than I had expected. I think we also had a Q3 behind us, which was actually a completely okay quarter, as we reported earlier. So now Q4 is also a completely okay quarter, if you start to look a little closer into the numbers. But we have a total of 20-24, which is a disappointment. At the moment, or in 2025, we also wanted to be able to put a lot of the ETM conflict behind us. We had a lot of changes in the company. And in combination with a robust business practice, we have built a resistance to the So it has increased throughout the year. In addition, Anders mentioned the order side. It is a little up from Q3 and a little up from the same time in the last year. I will come back to the cash side, but I see below in this picture that we have had a good operational current in the quarter. And on this background, I would say that we have worked down the risk of being able to deliver the guidance for the interior of the year at 2%. That feels good. The market is good. And we are building a solid company here. To look a little at the numbers, we see the table at the top right. A turnover of 1.7 billion in the quarter and an EBIT adjusted at minus 2. We look at the year as a whole, we are at 6.9 million and an EBIT adjusted at minus 93. That is in the lower part of the range that we have guided on since Q2, but it is within the range. So we should not be struggling under the sun, as I said, 2024 has been a demanding year, and as Anders also introduced, and we also see that from the table. We have a net result of minus 1 million. We can not avoid that. It has been driven by the decrease in summer. It has been driven by the additional strengthening of 30 million kroner now at the ETM. We had the Goddard decrease in summer. We believe that it did not come out, it was at 650 million. In fact, no cash effect in that. We had a complete restructuring of our kept area, or kept, in Q1. We had a big restructuring of Finland this fall. The restructuring is at 74 and Finland took 7 million. We have the interest rate up here, which meets the tax before we are completely below the level. And finally, we have taxes as you can see, and we have written down the tax benefit in the Norwegian tax with 79 million kroner. It is a requirement in the IAS rate, and it will be back when we have proven the loyalty. If we look at the left side of the slide, we see that the tax benefit, the EBIT adjusted margin for the year as a whole, is at minus 1.3%. If we correct for ETM and the deductions in Q2, we are at plus 1.4%. And with that, I would say that we are in the route of the promised 2%. We go in and look at the countries. We start with Norway. For Norway, 2020 and 2024 have been a significant turnaround year. The leadership is completely new. It is nice to see that Ingvild Storhås has now joined us from January. If we look at the numbers, we see that we had a turnover in the quarter of 510 million kroner. And then an EBIT adjusted margin of minus 20. That is where we have got this hit on ETM. There we have taken 30 million. In total, for the year, we see on the graph to the left, a turnover of a little over 2 million kroner. And an EBIT adjusted margin of minus 2.5%. Correct for ETM, we are at plus 2.1%. If we look at the other side, we have an order intake in the quarter of 317. It corresponds to a built-in start at 0.6. For the year in total, we are at 1.0. If we look at the total order, we see that Norway has 1.5 million orders. If we compare that with the top line, it is too low. The single-stand point, the single-standing highest risk, as I see it in 2025, is the order situation for Norway. And it is working very well. Over to Sweden. Very nice development. We see that the recovery, the improvement we have had over several years, continues this year. ETM is a bump in the road. Sweden is charged with 2.6 million kroner in the down payment from Q2 in these numbers. Correct for this, ETM is, no, sorry, Sweden at an underlying margin of plus 1.4%. If we look at the quarter, we see that Sweden had 546 million in turnover and EBIT is at 16. If we look at the other side, it is slumped in the quarter with 168 million, which corresponds to a built-in start at 0.3. For the year in total, it is 0.8. But Sweden has a total order reserve of 2.9 million. And as Anders was saying, very positive things have already happened in Q1. We have announced two contracts, and we have won a contract in the fall area of 83 million. And one in Vesterås at 267 million, so 350 million in total on those two. So Sweden will contribute to our total goal next year. Over to Finland. In the last quarter, we said and were very clear that Q3 represented a minimum point. Then we had an ETM margin of 1.6%. We have now, through the last quarter, raised it to 1.8%. And we also see that the revenue is 691 million and EBIT adjusted in the quarter is at 19 million. This will continue. Finland continues its good development, and that is driven by two conditions. One is the improvement program that I was in earlier, called Acceleration Lane. There we have taken the number of employees with 85 through the fall. And we have launched a new and effective division structure now from January. We also have an order situation that is good. We see that we had a very high number, we had 1.3 billion in order intake in Q4. There are now dominant Tampere projects, light rail projects, that went from design to construction phase. If I hold on a little to light rail, we can say that we have an exciting light rail portfolio. It consists of four projects. We have two now that are in the design phase. In the event of Turkey and Helsinki. And we have two projects that are in the construction phase. In the event of Tampere and Crown Bridges. So positive development for Finland. Let's look a little more at the financial side. To the left we see the cash flow for the quarter. And it is positive with 198 million. They are driven by positive cash flow from underlying business. As well as the reduction of labor capital in the fourth quarter. The labor capital we see especially in the middle graph here. We see that the difference between the salary on Q3 and Q4 is 161 million. So we have a very nice cash release in Q4. There are many seasonal effects in it. But at the same time I would say that we are at a very low underlying good level. In that it can be noticed that ETM is pulling our labor capital significantly up. So the underlying labor capital for NRC is significantly lower. And that is positive and it is a result of a lot of focus and good work. In all three countries. And especially Finland, which is completely sovereign in the labor capital management. To the right we see the cash development in the quarter. We have increased it by about 350 million. It is driven by the operational cash flow of 198 million. We see a financial cash flow of 157 million. It is again driven naturally by the emission up. And then we have 40 million in leasing. We have 19 million in rent and we have 15 million in loan costs. But in total it is a satisfying situation per Q4. But as I said earlier, per quarter, the labor capital and cash situation can also be somewhat optimized. Out of the 357 million in cash, we have a cash loan of 400 million kroner. If we look at the loan situation, we have a net of 622 million in rent and loan costs. It consists of a Euro-Panther loan of 175 million. An obligation of 400 million. And a leasing loan of 404 million. The net of the cash situation that I have just described. What is relevant to mention is that in the leasing loan of 403 million. It is also 230 million that is operational leasing loan. That is to say, type of loan agreements in FRS 16-based loans. I think that is completely relevant to mention. If we look at the time of the accident in the middle, there is no change. Here we have a flexibility and a good time base. My team and I will use more time on this in the future. To evaluate how the long-term capital structure should look like over time on the front capital side. If we look at the yield ratio on the right side. We see that we have a leverage ratio measured as net and yield in relation to 12 months of EBITDA. It made a stock in Q2. It will be high even in Q1 2025. From Q2 2025, the summer savings are out of the statistics. Then it will go down to the checked new year. We have suspended the covenant where we are measured on it. To Q4 2025 and is above the target, that is above the maintenance of all other covenants. Per 31.12. With that, I would like to give the floor back to Anders. To summarize our quarterly. Thank you, Oskar.

Again, 2024 has been a tough and challenging year. We have restarted and restructured the company, which has been necessary. It has generated a negative result and it is always boring. But within the range we communicated in Q2, so minus 93. I look forward, there are many positive things that have happened in the company. Things that strengthen that we are even more confident in the guidance we have communicated earlier. If I start with the order intake here during the year, it is one billion improved compared to previous years. And we have continued to have a balanced strong order stock. We see that the market is still very good. The position in the company is good. We see a good movement both for sustainable and both related infrastructure. Supported by energy, water and the energy sector. We have a strong financial position in and with a mission that is carried out in Q3. We have the prerequisite that we can navigate and execute our new strategies until 2028. And also navigate our upcoming legal process with the ETM project. I would like to emphasize that our relationship with Banenor is good. We have several other big projects. We have Bergenbanan, we have UNB10, which is on its way to completion. We have other projects and we have a good strong project organization that will carry out the project until the end of 2020. But a good dialogue. But in this case we want to try this right away. I am convinced that it does not interfere with our relationship with Banenor. We have also renegotiated bank and obligations during the year. If I come back to some things we promised would be carried out on the Capital Market Day in May. Then many things have happened and are on their way to happen. Of course our new strategy that was launched. We have implemented it at the concern level. We have implemented it at the national level. We are right now at the division level and are talking strategy. Because everyone in the company and especially all the leaders in the company should know how the strategy works. And how we will carry out and survive our value chain to achieve profitable growth until 2028. I have gathered strength during my first year in the leadership of the company. And very proud of the teams that are in place now. From the concern management to the national management to the division structure. I will mention Oscar, Thomas Johansson in Sweden, Ingvild Storås in Norway and several other leaders. We have restructured the business in Finland with a new division that is aimed at energy and electrification. And we see that these measures have an effect in Finland. We are going out of the fourth quarter with a margin of .7% that shows that we are in the right direction. And it is also a trend breach in Finland. We are on the right track. If we look further, we have gathered strength in our application process with a corresponding risk process. How we identify jobs that should be in line with our strategy and value chain. How we calculate and then how we follow the project with a continuous risk process all the way to the goal. I would like to emphasize that we still have a leading position in Finland. Oscar is also in the direction of Light Rail. There we are a leading actor with good profitability with a strong market. Back to Sweden, the same thing there. It also shows the Swedish business area with a margin of 3%. Here in the fourth quarter we are on the right track. And the same success in the round in Sweden continues. I want to conclude and talk about how we have handled and managed our machine fleet in the company that is now organized in a Nordic division. So that we can meet the market in a competitive and cost effective way. Of course, I always want to emphasize that the security situation in the company and the health situation are always prioritized. I feel comfortable with the movements that have happened, all the measures we have taken with this necessary restructuring and restart. Everything we have told from the capital market days and forward strengthens me in my belief that we will reach our guidance during the year at more than 7 billion in turnover and more than 2% in EBIT margin. And we are also stuck with the goal that we will reach more than 10 billion in turnover and more than 5% EBIT margin by 2028. With that said, we thank you for this presentation and open up for questions.

We can start with a few questions. There are many people down here, so I think there will be more questions on the way. Do you want to start? Virk La Høy, IQ4R, can you explain?

Yes, as I said, it is a description of the exhaust tax benefit in Norwegian accounting that has been reduced to 79 million in the books. I mentioned the EIS 12, so there is no way to see the upper 12, and it has given history in the last few years, but I expect that we will reverse it when we have proven the profitability in Norway. So no cash effect and no lost tax effect, or pure accounting effect, without cash and real effect.

I am very interested in this topic. So maybe I can explain a little about the questions around when we think the matter will come, because we are just talking about legal fees and so on, what we have been talking about. So maybe explain a little what we are thinking about. There will be some speculation, but maybe we should... If we start

with the numbers, we had a decrease that resulted in a forecast of minus 125 here in the second quarter. We have further strengthened this forecast in the fourth quarter to be able to be sure that we will not get more moves in this project, so a new margin of minus 155 was achieved. I emphasize that we have a good relationship in the progress that is being made on the project with Barnenor, and we have a good relationship with Barnenor overall. When a legal process comes up, it is difficult to guess, but if we look at how it usually looks with that timeline, it is reasonable to assume that it may be during the first half of the year, 2026. It is a guess, I do not know, but a guess.

And the question about legal fees, there is no opening for a new FRS, and then start to pay for future costs of that character, which we have not taken into account. But as I said, we have strengthened further in the FRS, with the mentioned 30 million kronor. You said something about the type of comfort we have at that level, which is now in the

books. The idea is that we should leave all these descriptions now and look forward to move on.

Is everyone ready? Then you came in. Is it mainly IT?

No, I mentioned the descriptions, we have goodwill descriptions, we have talked a lot about them, and then there is restructuring costs in areas that are totally restructured. I mentioned KEPT in Q1, with 74 million, and then I mentioned Finland with 7 million in Q4. And technically, just to take Finland as an example, we have significantly decreased.

Some

of the employees have a curfew that goes into 2025, and in the end, when they do not have a job in 2025, we will pay for all these costs, so they are in 2024.

There is some follow-up around that. It is easy to ask concrete questions. Do you expect any descriptions in 2025?

No, I do not expect any descriptions in 2025. Of course, simple projects, you can never say that you will not get simple projects that will be written down, but with the policy we now have, we are very comfortable with the project potential, now it is at 1.32, because we have implemented the new profit recognition model. And we have no other expectations, I also mentioned a risk process, where we have significantly better overviews, so we have no expectations of larger descriptions

in 2025. We meet 2025 with great confidence that we will deliver what we have promised. There is nothing that indicates anything else, and we are strengthened by the positive trend we had in Q4.

So there are repetitions of the same questions that come in, so there are no more new questions.

So we thank you for today's presentation. Yes,

we will leave it there. If there are

any more questions.